Pacific Ethanol raises $34M in capital

Pacific Ethanol Inc., which is building a new ethanol production plant in Stockton, announced Friday it had raised more than $34 million in new equity financing to provide additional working capital.

The Record

Pacific Ethanol Inc., which is building a new ethanol production plant in Stockton, announced Friday it had raised more than $34 million in new equity financing to provide additional working capital.

Company insiders, including Chief Executive Officer Neil Koehler and Chairman Bill Jones, put up $5.75 million in exchange for preferred stock convertible to 884,610 shares of Pacific Ethanol common stock, as well as warrants to purchase an additional 442,305 shares.

Also, in a direct offering with institutional investors, the company expects to raise $28.5 million in gross proceeds in exchange for 6 million common stock shares and warrants to purchase an additional 3 million shares.

Pacific Ethanol was in a serious cash squeeze earlier this year before it raised $40 million in March, which ensured funding for the Stockton plant, due for completion this fall.

Of this most recent funding, Koehler said Friday, "This is primarily working capital."

The company's operating margins are tight, primarily because of high prices for corn needed to produce ethanol, he said.

"With the credit markets being as tight as they are, as well, we felt it was prudent to put a little more cash on the balance sheet for operating capital."

The equity sale with company insiders was effective Tuesday. The deal with institutional investors, subject to certain conditions, should occur around Thursday.

After the announcement, Pacific Ethanol stock tumbled Friday in trading on the Nasdaq exchange, falling $1 to $4.18 a share. It recovered slightly in after hours trading, rising to $4.25 a share.